What’s Up With Ex-Im And Why Is This Called An “Airline Fight?”

Republicans want to “reform” the Export-Import Bank. Uh Oh. Lobbyists pushing this “reform” say helping American companies compete against subsidized foreign-made goods is “corporate welfare.” It turns out that a lot of the noise isn’t about what the lobbyists say it is about, it is about one company – Delta Airlines – using its clout to gain advantages over its competitors by trying to keep Boeing from getting help selling their planes internationally.

The Export-Import Bank (“Ex-Im”) helps American companies export by providing financing and insurance. This helps make up for foreign government subsidies to their companies. Republicans and various lobbyists are trying to keep American manufacturers — especially Boeing — from getting this help, while others are trying to get even more assistance.

Airlines?

Airlines? Delta? What do they have to do with this? Politico: Tom Coburn targets Boeing in airline fight. This article gets right to what this fight is about — airlines, not American-made goods, “corporate welfare,” etc…

Turning up the heat on Boeing Co., Sen. Tom Coburn wants Congress to bar the Export-Import Bank from financing aircraft sales to foreign airlines if the transactions do “substantial injury” to American carriers competing for the same international routes.

… he specifically targets “long-range aircraft” akin to Boeing’s new 787 Dreamliner, which is heavily dependent on international sales supported by Ex-Im loan guarantees.

In the article, the real root of what is going on here:

…Delta Airlines is challenging this assumption, saying that Ex-Im fails to balance Boeing’s gain against the financial damage done to carriers like itself.

Politico analyzes the fight and how Delta is involved:

Coburn’s amendment puts him squarely on Delta’s side and is significant for two reasons.
First it shows continued conservative dissent in the Senate, which is to vote Tuesday on a four-year re-authorization for the bank — including a $40 billion increase in its loan limit.

Majority Leader Harry Reid (D-Nev.) is counting on business support to help him get the 60 votes needed. But if enough Republicans side with Coburn — or at least want him to have a chance first to offer his amendment — Reid may have to alter his tactics.

Second, as the debate moves next to the House, Coburn’s language is an important marker for what Delta advocates most want. A draft House bill prepared by the office of Majority Leader Eric Cantor (R-Va.) does not go so far. And Cantor’s camp would argue that this shows the Virginia Republican has tried to find some middle ground even as he has made major concessions to Delta.

A sleepy Export-Import Bank debate in Congress has blossomed into a corporate political brawl matching the powerful Boeing Co. lobby against Delta Air Lines, represented here by a close friend and supporter of House Majority Leader Eric Cantor.

… Cantor is without a doubt the crucial broker for the House. And Boeing is hammering away at his close ties with Delta lobbyist and confidante Andrea Newman — even as it fields a small army of its own.

If it seems David vs. Goliath, Newman, as Delta’s senior vice president for government affairs, comes with a BlackBerry instead of a slingshot. In an anecdote Cantor’s office denied Friday, he is said to have once emailed her about an aviation bill while still in a members-only meeting with the White House on the subject. And the two enjoy what’s described as a genuine family — University of Michigan — friendship even as she helps him raise campaign funds.

Close ties with Delta’s lobbyist? Say it ain’t so…

Is Delta A Rogue Company?

Is Delta a rogue company? I have written before about Delta using lobbyist clout to get favors from Congress. Among them:

Now here’s George Will, in High-flying corporate welfare, (Note the lobbyist phrasing, pretending that Republicans are against “corporate welfare.”) Will is complaining that Boeing, specifically, benefits from the Ex-Im Bank. Here is the most stunning statement in this piece:

There is an understandable urge to counter the subsidies that foreign governments give to companies competing with U.S. companies. The result, however, is an increasingly mercantilist world.

What next? Look for proposals to authorize the bank to subsidize U.S. manufacturers competing with foreign imports that have price advantages because of government subsidies. And so it goes, subsidies begetting counter-subsidies, as U.S. trade policy is increasingly set by foreign governments.

Well, yes, proposals to do something about subsidized foreign imports would be a good idea, no? But will says responding to economic attacks by other governments means we let other governments determine our policies? What? If another country is attacking us, that had better determine our policies — choosing to defend ourselves — for us, and in a hurry.

The Bamboozle Express

You always know something is up when Republicans haul out the old bamboozle express. Here is Sen. DeMint, on the Ex-Im Bank. (Keep in mind this is a Republican complaining about “corporate welfare” and “cronyism” — that alone should tell you that something funny is going on. I’m trying to get my head around Republicans complaining about corporate welfare and cronyism…)

Ex-Im, as it is known, is a federal program that gives politically appointed executives power to lend mainly to foreign companies that buy American products and services. ….

… It was just this kind of political mischief that spurred banks to make subprime mortgage loans and led General Motors to make an unpopular, expensive, flammable electric car – all the while putting taxpayers on the hook for the losses.

… Is it fair that foreign countries subsidize their companies? No. But, America didn’t become the world’s strongest economy by trying to out-socialize Europe, and we won’t win the future by picking winners and losers with taxpayer dollars.

OK, electric cars are flammable – as compared to cars powered by gasoline??? “Political mischief” led companies to make subprime loans??? Helping American companies compete is trying to “out-socialize Europe”??? We shouldn’t do anything about it when other governments subsidize their companies and hurt our economy? You just know something is going on when you read this sort of thing. And, especially, you know that you are reading the kind of nonsense that lobbyists write.

The U.S. Chamber of Commerce weighed in heavily on behalf of the Export Import Bank Monday night, signaling a last business push to rally Republican support in what’s become a closely-fought vote in the Senate Tuesday.

“Failure to reauthorize Ex-Im would amount to America’s unilateral disarmament in the face of other nations’ aggressive trade finance programs,” the Chamber told senators. “China has three export credit agencies that last year provided $300 billion in export finance to its exporters — 10 times more than Ex-Im provided.”

National Association of Manufacturers (NAM) President and CEO Jay Timmons issued this statement urging senators to support the amendment offered by Sens. Cantwell (D-WA), Johnson (D-SD), Graham (R-SC) and Shelby (R-AL), which will reauthorize the Export-Import Bank (Ex-Im) and increase the Bank’s lending limit to help manufacturers in the U.S. reach new markets.

… It’s imperative that Congress reauthorize Ex-Im and increase the Bank’s lending limit for the sake of jobs and the competitiveness of manufacturers in the United States. Should Congress fail to act, it will give our competitors an advantage, harm job growth and create a large speed bump in our path to doubling exports.

Our competition is providing hundreds of billions of dollars worth of export financing and is leaving us in the dust. We cannot afford to stand on the sidelines.

About Dave Johnson

Dave has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.